Despite loan waiver, major projects not funded by govt to be on track

Notwithstanding the Rs 34,000 crore crop loan waiver scheme, the Maharashtra government has projected that the implementation of a slew of development projects worth Rs 2 lakh crore across the state will be carried out smoothly. This is because these projects don't have government funding, as funds are being mobilised by government undertakings through internal accruals and multiple instruments including long-term loans from domestic and foreign lenders including Japan International Cooperation Agency.

Some of the projects being actively pursued by the government include Mumbai metro expansion (Rs 82,172 crore), Mumbai-Nagpur expressway (Rs 40,000 crore), Mumbai Transharbour Link (Rs 17,750 crore), Navi Mumbai international airport (Rs 16,000 crore), Mumbai costal road (Rs 13,000 crore), Pune metro (Rs 11,420 crore), Nagpur metro (Rs 8,680 crore) and Bandra-Versova sea link (Rs 7,500 crore). These projects are under various phases of implementation and they are expected to be complete in stages from 2019 onwards.

A government officer, who did not want to be identified, told DNA, "However, the projects funded through budgetary allocation in road, irrigation and power sectors may suffer as the government may introduce 30 per cent cut in spending to implement the crop loan waiver scheme. The government has made an allocation of Rs 8,233 crore for irrigation, Rs 7,000 crore for roads and Rs 2,500 crore for energy. '' He said that the government will raise Rs 39,000 crore during the current fiscal as permissible under the Fiscal Responsibility & Budgetary Management (FRBM) norms. Of this, nearly Rs 15,000 crore may be used for a crop loan waiver and the balance for interest outgo worth Rs 28,000 crore. This will leave very limited funds for the capital expenditure.

The officer said that the government proposes to tie up with banks to pay the amount of Rs 34,000 crore towards loan waiver in three to four instalments.

"If the banks did not accept the proposal for payment in instalments, then the government may use cash reserves of several government undertakings including the Maharashtra Industrial Development Corporation,'' he noted.

& analysis

The loan waiver is being touted as historic and unprecedented, but is bound to have an impact on the committed expenditure of the government.
It will entail cuts in spending on various ongoing schemes and projects if the government decides on a 30 per cent reduction in the budgetary allocation.
However, the government hopes that if the banks agree for payment towards loan waiver in instalments, then the burden will be partially reduced.
Amidst low mobilisation of various taxes due to slowdown and little money available for capital expenditure, the government will have to strive to achieve a double digit growth in the current fiscal.